Vachette Pathology

In-Office Labs with CAP Accreditation… A Juxtaposition?

2011-12-13T12:09:00.002-05:00

More in-office labs are getting CAP accreditation even though the College of American Pathologists is vigorously lobbying Congress to exclude anatomic pathology from the in-office ancillary services exception to the Stark rules that prohibit self-referral. CAP states that when physicians order on the basis of financial interest, there is enormous potential for over-utilization of testing. Ironically though, more and more labs are getting CAP accreditation.

CAP clarifies its position on In-Office labs in October’s issue of Laboratory Economics…

In regard to in-office laboratory business arrangements, the CAP’s fundamental concern is that under the Stark in-office ancillary services self-referral exception, the incentive—regardless of accreditation—is to order and provide more testing services than are necessary, leading to overutilization of services and higher costs to the system. The incentives in these arrangements are misaligned, as is made clear by Congress’s current efforts to move away from these types of payment incentives.

The CAP accreditation process focuses on ensuring that ever lab we accredit meets the highest possible standards for operation under the law. Through the process, we verify what testing and services are provided, and ensure that they comply with CLIA. However, the accreditation process does not include scrutinizing or collecting information on a lab’s business arrangements.

Due to the requirement that CAP-accredited labs provide like-teams to participate in the accreditation of other labs, it is rare for an in-office lab to quality for CAP accreditation. However, it can happen if the lab meets all of CAP’s requirements, or if CAP review is requested by CMS, which does happen from time to time.

Electronic Submission of Medical Documentation

2011-12-02T08:22:00.000-05:00

As you know, CMS has employed several types of Review Contractors to review and recoup improper payments each year. The Contractor’s role is to review, measure, prevent, identify, and correct any improperly paid claims. This is done by selecting a sample of claims, requesting medical documentation from the provider who submitted the claims, and manually reviewing the claims against the medical documentation to verify the provider’s compliance with CMS rules.

The documentation is currently requested by sending a paper letter to the provider and the provider has two options for submitting the requested records – mail paper or send a fax.

CMS intends to give providers a new mechanism for submitting medical documentation. They are calling this mechanism Electronic Submission of Medical Documentation (esMD). During Phase 1 of implementation, the Review Contractors will continue to send medical documentation requests via paper and provider will have the option to electronically send medical documentation to the Review Contractor that requested it. CMS esMD Gateway went live on September 15, 2011.

Several Review Contractors have already been APPROVED to participate in the esMD pilot effective September 2011:

· Recovery Audit Contractor (RAC) A

· RAC B

· Medicare Administrative Contractor (MAC) J1

· MAC J3

· MAC J4

· MAC J5

· MAC J9

· MAC J11

· MAC J12

· MAC J13

· MAC J14

· Comprehensive Error Rate Testing (CERT) Contractor

· Program Error Rate Measurement (PERM) Contractor

· DME MAC A

· DME MAC B

· DME MAC D

Look for more Review Contractors to be added as the program progresses.

For more information, search CMS’ website: www.cms.gov

Local Coverage Determination: KY and OH

2011-11-17T15:36:00.000-05:00

Coverage Determination (LCD) Local Changes for Immunohistochemistry and Flow Cytometry

The recent change of Medicare Part B contractor from Palmetto to Cigna Government Services that took place in July 2011 also brought about changes to the LCD for IHC’s and Flows for Ohio and Kentucky.

An LCD, Local Coverage Determination, is the guideline that is required by CMS for fiscal intermediaries, MAC contractors, and carriers to issue to direct providers how to submit claims for certain services. LCDs also designate diagnosis codes needed to justify medical necessity for services, establish billing guidelines, and include limits on frequency and patient eligibility.

Below are the changes for Immunohistochemistry and Flow Cytometry for CGS that pathologists need to be aware of moving forward. Your billing service should also be aware of the new policies.

LCD L31873 for code 88342 Immunohistochemistry, each antibody

This LCD includes a list of diagnosis codes that CGS feels supports the medical necessity for reimbursement for this service. The list is rather extensive and pertains to many conditions across the organ systems but excludes many common signs & symptoms often associated with pathology billing such as nausea, vomiting, diarrhea, and abdominal pain.

The LCD also imposes limits on the number of payable units per specimen. CGS states that it would be unusual for more than ten (10) units to be medically necessary for one sample of tissue. Units reported above this threshold should be supported in the pathology report.

LCD L31870 for codes 88182 – 88189 Flow Cytometry

The LCD for flow Cytometry also includes a list of diagnosis codes felt to support medical necessity for reimbursement. The list mostly includes neoplasms, conditions of the endocrine, nutritional and metabolic systems, and diseases of the blood and blood-forming organs.

For more information, contact us at 517.486.4262.

The Retroactive Cheeseburger Tax

2011-11-08T16:17:00.000-05:00

Medi-Cal the California Medicaid program is proposing cutting payments 10% and is also looking back retroactively to June 1, 2011 for recoupments.

This means that if you provided treatment to patients between June 1, 2011 and now Medi-Cal will take back 10% of those payments. In simple terms it is like going to a restaurant for a cheeseburger today only to be told you owe an extra $.40 for the burger you bought back in June as the price for the past eaten cheeseburger has now been increased.

Of course there will be some legal actions and the subsequent fight but what about the principle of the idea. The Department of Health Care Services, DHCS noted that “there will be no appreciable impact on beneficiary access to providers after these reimbursement reductions.” Really, do you think providers are going to scramble for more Medicaid patients knowing that at any time the state can say “we changed our minds; you now owe us 10% of the payments that we paid you over the past four months?”

5010 Deadline is Looming!

2011-11-02T07:52:00.000-04:00

January 1, 2012 is closer than you think. If you haven’t had an opportunity to focus on the changes that are required for electronic claims effective on this date, you should make that your number one priority over the next 90 days to ensure no disruption in cash flow. This is critical because cash flow is already lower at the beginning of each year due to ‘deductible season.’

The AMA has listed the following steps to protect your cash in its “5010 Implementation Steps: Getting the Work Done in Time for the Deadline:”

Submit as many transactions as possible before January 1, 2012.
Decrease expenses before 1/1/12 to increase cash reserves.
Consider establishing a line of credit with a financial institution.
Research payers’ advance payment policies.
Consider using manual or paper processes to complete transactions until the electronic transactions are fixed.

Note that the HIPAA standards, including Version 5010, are national standards and apply to your transactions with all payers, not just with FSS Medicare. That means you need to be prepared to implement these changes and transactions across the board.

Some improvements in Version 5010 electronic data transfer are:

Standardized business information related to the transaction.
Utilization of Technical Report Type 3 (TR3) guidelines that represent data consistently and are less confusing.
More specific definition of the data that needs to be collected and transmitted.
Accommodation of the reporting of clinical data such as ICD-10 diagnosis codes.
Distinguishes between principal diagnosis, admitting diagnosis, external cause of injury, and patient reason for visit codes.
Monitoring of certain illness mortality rates, outcomes for specific treatment options, some hospital length of stays, and clinical reasons for care.
Addresses indicators on institutional claims for conditions that were “present on admission.”

If you can answer NO to any of the following questions, you are at risk for not being able to meet the January 1, 2012 deadline and not being able to submit claims:

Have you contracted your software vendor or billing agency to ensure they are on track to meet the deadline?
Have you identified changes to data reporting requirements?
Have you started to test files with software vendors, clearinghouses, or billing services?
Have you started testing with your MAC, which is required before being able to submit claims, with Version 5010?
Have you updated MREP software to view and print compliant HIPAA 5010 835 remittance advices?

Resources: MLN Matters Number: SE1131

What's Next...Medicaid RAC Audits?

2011-10-04T14:35:00.001-04:00

Yes! That’s exactly what’s next. On September 14, 2011, CMS (Centers for Medicare &Medicaid Services) released their final rule detailing the implementation of the Medicaid Recovery Audit Contractor program. Similar to Medicare RACs, states will contract with RACs who will search paid claims for fraud, waste and abuse. The auditors will be compensated based on a percentage of the funds that are recovered. The auditors will also be searching for underpayments that must be paid out.

Physicians and hospital organization are concerned about the amount of administrative burden from yet another regulatory agency placed on doctors and facilities. They have asked for an explanation of the types of claims or billing situations that would attract Medicaid RAC review so as to avoid errors that could trigger unnecessary audits. The AMA remains concerned about the incentive-based payment structure in place for Medicaid Recovery Audit Contractors. Their belief is that the best way to reduce improper coding is through education and outreach.

There are several rules that differ from the current Medicare RAC rules. Some of the key differences are listed below.

· Prohibiting audits of Medicaid claims more than three years old.

· Requiring each auditor to hire a licensed physician as medical director.

· Requiring states to coordinate their Medicaid RAC activities with those of other auditors. Claims that are being investigated by another company may not be included in a RAC review.

· Calling on states to set limits on the number of medical records a RAC can review and the frequency with which they can request records.

· Requiring RACs to return their fee if an overpayment determination is reversed at any level of appeal.

The Medicaid RAC program follows in the footsteps of the Medicare RAC implemented in 2010. From January to June 2011, Medicare RACs have recovered $451 million in overpayments and $78.5 million in underpayments according to CMS. As lucrative as this may sound, CMS has not reported how much of the recovered overpayments have been ‘refunded’ back to the physicians due to reversal of the audit on appeal.

As an afterthought… if state budgets are already maxed or at deficit levels, how can they possibly afford to hire an auditor? Will they be doing so with dollar signs in their sights? It is well-known that state Medicaid programs are in need of an overhaul in claims processing. Keep your ears open for more to come on this program implementation.

6th Annual Business of Pathology Review

2011-09-07T12:41:00.000-04:00

The year 2011 has been an interesting year for healthcare and for physicians in general. It marked the beginning of the national healthcare plan and all the good, bad, and indifferent things that come with this change. The changes to pathology payments were affected also.

There are three main issues that are directly affecting pathologists’ incomes. They are increasing self-pay billing, managed care denial tactics, and poor billing practices.

The billing world is only now feeling the effects of the unemployment market. The COBRA 1 coverage offered by large employers covers 18 months of healthcare. Only now are we seeing these patients in the system as true self-pay. In some cases, hospitals and health systems, and even labs, are paying a patient’s extended CORBA 1 coverage as this allows them to bill the patient’s insurance company versus billing the patient directly. Another important factor in play here is the ever-increasing personal deductible. Just five years ago many employees had a $500.00 deductible; now more and more employees have a $5,000.00 deductible. Since the patient is directly responsible for more health care dollars, the account becomes much harder to collect and more likely to move to the collection bucket in the end.

It is more important now more than ever to have a clean self-pay demographic file, and an efficient self-pay billing process. This should include credit card payments and a strong collection process. The bottom line is that in many areas of the country the self-pay collection rates have dropped from 11%-8% to around 5%.

The managed care billing world has become more complex as the industry matured. There are numerous tactics that these plans use to force the work to their “approved” labs and to keep payments in check.

Several national payers have made it very clear that they want all work that is leaving the network to be pre-approved; without pre-approval these claims are automatically denied. Some payers now require a group to bill under two separate tax identification numbers if they are billing from two sites or types of service and one of them is non-participating.

Another favorite tactic is to deny or reduce payment to the referring physician if they send work outside the network. Another trick is for the managed care plan to black-ball a provider if they leave their provider network. Some have taken to sending letters out to all the employers in the area telling them that a provider is no longer participating and telling their enrollees to use a different hospital or provider.

There is also an increasing trend for insurance plans to deny claims. Many national plans deny over 15% of all the claims that are billed. This means billers have to work harder to appeal these cases and gather payment. The payment rates now offered by managed care plans are reaching new lows. Several plans have offered their clinical lab fee schedule to hospital pathologists and independent labs. Also, many offer these rates directly through the group’s PHO or MSO and never tell them this is their competitive national fee schedule at about one-third of the CMS physician fee schedule. This is equal to getting paid $18.00 for an 88305-26.

More and more of these managed care insurance plans are now routinely denying any clinical charges including the CMS approved clinical charges. Many practices have negotiated carve-outs for clinical pathology or improved anatomic pathology rates to compensate for this loss.

Finally, 2011 seems to be the year for many catastrophic billing failures. In review of over 70 pathology practices, laboratories, and hospitals, it seems we have found a new genesis of billing errors. As billing becomes more complex, the failures only compound the lost revenue.

For hospital-based groups we see numerous billing errors made on the payment side as the billing entities struggle to keep up with network and affiliate arrangements. Often groups think they are getting paid one rate only to find that they are getting paid a much lower rate through a silent PPO or network arrangement.

Many hospital based groups own a small private independent lab. In some cases these groups bill both professionally and globally under the same tax identification number. It is inevitable that in this arrangement the payers choose the lowest rate. It is quite common to see global bills paid at a professional rate.

For independent labs the main struggle is to build and maintain a strong list of managed care plans. Sometimes this means lowering their expected payment rate to gain a managed care contract.

Some hospitals are now bringing their pathology groups in-house and putting them on salary. In this case we see the hospitals paying a fixed salary to the pathologists but not truly understanding how much revenue they are bring in to cover these costs. We are working with more and more hospitals nationally to help them bill and collect for these services correctly.

The year 2011 has been an interesting year for pathologists’ payment arrangements. The year 2012 will see an even bigger change as we expect to see ACO’s take bigger stage and fully expect to see more bundling of services by both CMS and the commercial payers. Stay tuned…

How to Gain a Better Managed Care Contract for your Independent Laboratory

2011-08-29T19:58:00.000-04:00

Many labs are struggling to get contracted with payers in their area. These are strong practices and good pathologists who just want to provide a quality outcome for their patients while making a decent living.

Gaining these contracts allows the lab to gain market share and, if done correctly, increase their revenue. If your problem is getting managed care companies to sign contracts, here are some real hard core tactics that work. This step-by-step process will help you get managed care contracts or renegotiate poor contracts.

Pick the right payer. Review your referring physician list and talk with your billing people. They will tell you which payers you need to work with. Use the 80/20 rule and start with the biggest volume payers.
Contact the payer and get a face-to-face meeting. This will be the most difficult step. Payer Representatives are busy and change jobs often. Expect to make at least 20 phone calls. Once you get the meeting set, expect them to cancel it several times.
Prep for the meeting.

Publications: You should have every article that you and your partners have ever published ready to present. Have these on the table for the meeting and they should be an item on the agenda.
Have all your community projects ready to present. This means all town or local committees, board memberships, TPA, library, coaching positions etc. It’s imperative that you show you are part of the local community.
Be prepared to show them your quality control plan; note your quality and processes and how you maintain industry standard quality.
If you have a bar code system show them how this works and why it helps prevent errors.
Build a graph that shows your lab process and TAT. Make sure they understand that your referring physicians get a 24 hour TAT on their cases. Be prepared to explain why this is important. Have a story about a patient and how your diagnosis solved their case.
Have your CV’s ready. Show them your schooling and your training; make sure they understand any specialty training. Explain how this helps their enrollees get better health care.
List all your hospital and university affiliations. All these should be presented and explained.
Have a plan to show them your accessibility. Note that all your referring physicians have your cell phone numbers, show them your business cards, and explain how this helps your referring physicians.
Show them your EMR and how it allows your customers to access their cases and makes the patient process more efficient.
List out your use of special stains and compare this to others in the industry.
Show them cases where others have used you as a consultant and then tell why.
Get some letters of reference. Have some of the big referring physicians write letters noting your quality and their desire to work with you.

Have the meeting at your lab. Start with a tour of your laboratory; note your technology and how you do what you do. Explain the entire process and give it a personal touch. Follow one piece of tissue through the process from excision to final diagnosis. Have a story and use it.

Present your case. List out the details and processes noted above. Go through this very thoroughly. A PowerPoint presentation works well. Give them time to ask questions and get a good understanding. Have a two-headed scope ready, show them what they are paying for, have a story under the scope and let them see what you do every day.

Tell them you want a better contract. Be sincere and direct and note your terms up front. Show them where they compare to other payers, without releasing names, and then gently asked to be treated fairly.
Follow up after the meeting. This means a face-to-face meeting again talking with the payer representative and asking them for a new contract. You must ask for the contract or rate increase.
Finishing up. Now that you’ve presented your case and asked for the contract you must continue to follow up on this task. Follow up should take place face-to-face whenever possible. It’ll take work to gain a new contract or fix an old one.

Quarterly meetings with these reps are a must, you should bring them in and let them see your new equipment and see why you purchased this and how much time and effort it costs to do the testing correctly.

In conclusion remember this process takes time and energy and it may very well happen that over the time it takes to get the contract, the payer representative will change. This means you have to develop a new relationship with the next payer representative to step into the breach. Above all, remain focused and determined.

Cigna Changes Again

2011-07-19T09:58:00.000-04:00

It has come to our attention that major changes are in the works for Cigna providers. Here is a simple list:

In several states we have seen Cigna propose a rate that is closer to the Medicare Clinical Fee Schedule versus the Medicare Physician Fee Schedule. This is a huge problem as the clinical fee schedule pays about 50% of the physician fee schedule. The most interesting thing noted here is that they are proposing these rates to PHO's and stating that this is the current CMS fee schedule. It is, but it's the wrong fee schedule! Be aware.
In another move, Cigna has lowered the filing limit on some contracts from 180 to 90 days. Again this is just another play by the payers to limit payment for services.

No One Knows

2011-07-15T11:26:00.000-04:00

National healthcare is moving forward but no one really knows where it is going or what it will look like. Take Medicaid for example: It is in a pickle! Here is what we know:

States want more money to run their Medicaid programs
Medicaid programs are a hassle for both patient and provider
Medicaid programs continually run out of cash to pay providers

So what is their answer to this? Put more people in the Medicaid programs. HUH? This makes no sense but it’s exactly what Florida is doing. They are going to make every Medicaid patient go through an HMO. Will this decrease the volume of healthcare treatments? NO! In fact it will increase costs…its simple: If you give everyone access to healthcare, they will …wait for it…use more healthcare. Doesn’t make sense to me, but then not much does when it comes to the government and medicine.

Ready for 5010?

2011-07-07T09:27:00.000-04:00

The switch from the old electronic data standard ANSI 4010 to the new ANSI 5010 format is just six months away and National Testing Day has come and gone. Every major carrier has a web post, page, or journal outlining their schedule for testing and when they will be ready. That sounds great in theory, but the reality is somewhat different. Most billers are ready and waiting on the carriers, and the carriers are not testing with them.

One billing company has a web page that shows testing status for all of their payers, including those under clearinghouses. Approximately 2,275 carriers and Third Party Administrators (TPAs) are listed. A grand total of fifteen non-governmental carriers are tested and approved. This indicates that there is going to be a mad rush to test in the latter half of the year straining IT resources and leaving little time for problem resolution.

Cigna states on its website that it would test from June through August of this year, using post-n-track.com to log progress. Last update: May 4, and nothing is indicated at this time in testing. Aetna is currently testing; many other carriers are not advertising where they are in the process.

Do not expect a delay of the compliance deadline. ANSI 5010 is an important and necessary precursor to the ICD-10 transition in 2013. The Centers for Medicare & Medicaid Services (CMS) have made it clear that there will be no extensions.

Claims may be delayed if your biller and the carriers are not ready. Make sure your practice is ready for the switch. Talk to your biller about their readiness and the carriers they work with and make sure they have a game plan in place.

More Managed Care Contract Restrictions Equals Less Money

2011-06-28T14:29:00.000-04:00

If you haven’t heard of House Bill 5085 in Illinois, you will. This is a major change in the way that payers are dealing with hospital based practices who do not participate. In the ever changing war of trying to receive payment for services, the payers have pulled out their nukes. This bill, which was passed at a late hour, states that a hospital based provider cannot balance bill a patient if the provider is non-participating with the payer.

How does this affect your practice? This means you have no leverage to negotiate and the payer has the freedom to pay you what they deem to be a “usual and customary fee” for services provided. Understand there are some similar laws in Texas, Maryland, Arizona and Florida but most of those have dollar amount caps and are limited to just HMO patients. This law covers most insurance plan types. Several questions abound: What is the usual and customary fee? Who determines this fee? Why wouldn’t the payers use a low rate, say…the Centers for Medicare & Medicaid Services (CMS) clinical fee schedule?…You can see where this gets really dicey. Also note: In Illinois, it is common for insurance plans to pay for clinical pathology. What happens if the payers determine that clinical pathology is not “usual and customary?” The final outcome of this has not been decided at this time. The law went into effect on June 1^st 2011 but no one really knows what this means at this time. Stay tuned…

Blue Cross Blue Shield Changes Filing Issues

2011-06-23T15:07:00.000-04:00

In November of 2010, the Blue Cross Blue Shield Association (BCBSA) made a ruling change that states any ancillary provider, such as an independent lab, must file with Blue Cross Blue Shield (BCBS) in the state in which the specimen was collected.

Prior to this, the claim would be filed with the local BCBS and they would forward the claim to the appropriate state. Now BCBS in Florida is no longer accepting out of state claims. Moreover, Florida states it will not contract with out of state independent labs. This trend will continue as more states follow suit.

The other, and more malevolent change, deems providers must send specimens to labs in the same state the specimen was collected unless the required testing is not available in that state. BCBS states that the change is not recent, but ‘clarification’ has recently been issued to help determine the origination of the specimen and identify the correct local plan.

We are seeing claims denied as ‘out of network’ by BCBS of Florida (BlueOptions). They state the providers in Florida were notified not to use out of state labs.

Speaking with a BCBS Network Manager NOT in the state of Florida revealed that pathology and specialty labs should be exempt from this rule, and that Florida’s denials could be related to a Place of Service 81 designation which is for independent labs. Place of Service tells the carrier the origination of the specimen, such as office, independent lab, ambulatory center, etc.

Although we currently are experiencing this issue only with Florida, BCBS does say this was a national directive. Regardless of whether this is a new ruling or simply a new clarification of a standing ruling, it has the potential to be a large problem. This may affect your business if you have out of state specimens coming into your lab.

We are currently in the process of speaking with the National Association and getting a definitive answer.

How Not to Do It.

2011-06-14T16:29:00.000-04:00

My firm is lucky enough to audit medical billing practices across the nation. We have audited the gamut of billing companies from the small local business to the medium sized regional firm to the large national players; we also audit groups that perform their own billing.

Often after reviewing the results of our audit with the practice the group will ask me; “is this the worse you’ve seen?” It never ceases to amaze me what we find. Here are some examples to help remind us that even though you think “everything is fine” sometimes you are just fooling yourself:

A practice that had a negative account receivable. Yes you read this correctly, at the end of each month, according to this biller, the group owes money on their receivables!

A practice where their biller does not bill multiples. Whenever the practice bills a cpt multiple times on a case only one gets billed.

A practice where their collection agency collects 33% of the amount sent to them by the biller. Somebody is not doing their job properly.

A practice where 20% of their outreach work in not being billed.

A practice that is paying 2% more than the going national rate for billing and their AR over 120 is at 23%!

OK, enough of this…I am always astonished when the group is amazed when I find issues like this as a result of our audit process. The bottom line is simple; There is always someone out there doing it worse then you thought.

Remember you are a business owner just like me, you have to pay attention to your shop and manage your business, if not then changes in the market and environment will eliminate you from the equation.

I Have No Time For That.

2011-06-03T11:00:00.000-04:00

One of our practices recently received a letter from one of their payers stating they are changing their filing limit to 90 days. Now if you own your own office and have ready access to your billing information this is no big deal, but if you are a hospital based provider or rely on others for demographic of payment information this is a big issue. For example there are many hospitals that cannot finalize a case until two weeks after the discharge date, add time for billing process and denials and it doesn’t seem hard to see how sometimes this filing limit is missed. Ideally this would never happen in a perfect billing world, but billing is far from perfect.

Now why is this happening? Well more and more it seems every contract that you sign is just a series of denial reasons to keep a claim from being paid. Often we are seeing denial rates from major payers over 20%! This means 20% of the claims have to be re-filed and reworked and this means more time and effort on your biller’s part. By the way, Medicare has only a 4% denial rate.

This means that your processes and efforts must be running at complete efficiency to keep the money flowing smoothly.

The Medicaid Question

2011-05-26T09:04:00.000-04:00

Recently it came to our attention that Great Lakes Health Plan is now part of UHC in Michigan. The last I knew Great Lakes was a Medicaid plan. This brings some interesting questions to mind:

If all the states move to Medicaid voucher programs, is this a play for UHC to get the upper hand in this process? Medicaid voucher programs are becoming very popular as states and the federal government struggle to control cost and yet allow access to everyone. For example, Florida is now looking to move all their Medicaid patient’s into voucher programs. What does this mean to you as a medical practice? It means that now you have to negotiate a contract for all these patients plus you now have an extra middle man between you and your payment for your hard work. We all know that dealing with Medicaid is a pain; dealing with Medicaid HMOs is going to be even harder. This is just like instead of borrowing money from a bank, you are now borrowing money from the loan shark.

Last thought, I worked in the Detroit health care market in the 90’s and at that time there were numerous Medicaid HMOs in the market all trying to make a go of it. Most of these imploded and went bankrupt. In the end the physicians got paid $0.2 on the dollar…

When Guides Go Bad

2011-04-28T09:21:00.000-04:00

I choose to spend my free time climbing mountains. The thrill I get from accomplishing this feat gives me a strong, happy feeling. It reminds me that it is great to be alive and makes me more grateful for the wonderful life that I have.

When I climb I go with a guide, someone who knows the mountain and who understand the weather patterns and cycles that occur in the area. I am very lucky as I have climbed with guides who have climbed Mt. Everest and who are well known in their field. I choose my guides carefully and interview them in depth to get a solid understanding of their experience and background. Are they working for a solid reputable company? Is this a firm that can provide support and backup when things go bad? Is there a team in place in case the guide fails? How long have they been guiding and what is their true pedigree? Do they really care about me as a person and if push comes to shove will they go the extra mile or are they in it to make a buck?

These questions are important because things are not always as they appear. Once I spoke with someone who said they had been guiding for 17 years. What they didn’t say was that for most of those years they were actually working at a postage mailing company and not really guiding at all. They simply made up the experience. I check their resumes and their climbing logs to make sure that I am not putting myself in a risky position.

In choosing a practice management company you are choosing a guide. Someone who can help you and your practice move in the right direction at the right pace to gain the summit. Choose wisely who you tie the rope to as this person can make or break your practice.

Remember when you are tied into a rope team you are only as strong as your weakest member. Make sure your guide is the strongest member. That is what you are paying him for.

There Really Are No Shortcuts to the Top

2011-04-21T13:51:00.000-04:00

It doesn’t depend on whether you’re running a company, managing your business or climbing a mountain. You must pay your dues to get to the ultimate reward.

I have been training since last fall to climb Mt. Shasta in northern California this spring. This is a tough, three day climb with a lot of vertical and several nights spent sleeping on snow.

In training for this type of activity there is no shortcut. You must work out almost every day. Lately, part of my workouts include running in preparation for the upcoming Glass City Half Marathon. This means I spend many of my evenings in my basement running to nowhere on my elliptical and watching endless hours of recorded TV. Hopefully if all goes well I’ll cross the finish line after running 13.1 miles.

This is the same type of dedication that is needed to run your practice. You must constantly be aware of your goal and where you want to be in the end. Just like training there will always be other factors that will try to persuade you from your tasks at hand...intermediate fires that need attention, day-to-day tasks that need performed and the business of running your business sometimes takes our focus off the main goal.

It is imperative that you fix and maintain this goal in your mind and in your actions. Doing every day what you can to strive forward and using the right tools and personnel to accomplish the task.

In the end we are all climbing a mountain of some sort. Whether it is a mountain to retirement or a small hill to financial security, either way we must keep on task to make our summit.

This blog is simply to remind you to get that goal laid out in your mind and on paper. Remember to “begin with the end in mind” and have all your efforts pointed towards the same results.

Our goal at Vachette is to help you attain your goal by helping ensure your practice is viable and stable while you move toward your desires.

Observations from USCAP 2011 by Mick Raich

2011-04-07T10:03:00.000-04:00

I am a money guy, an auditor and a billing and salary expert in the pathology world. While attending the recent USCAP meeting I decided to use my “money” brain while talking to various pathologists from around the world that had made the trip to San Antonio, Texas. I asked the various international pathologists, “What does a pathologist make per year in your country?” Now I understand this is not the most scientific method and that these numbers may be over or understated, but the answers were interesting. Here is what I found:

Mexico: $30,000

Ireland:

$280,000

Korea:

$120,000

France:

$210,000

Argentina:

$80,000 - $100,000

Italy:

$210,000 private; $100,000 public health system

Iraq: $24,000

China: $30,000

Greece:

$250,000 private; $25,000 public health system

Brazil: $50,000 -$70,000

England: $217,350

Croatia: $30,000 - $50,000

Turkey: $50,000 - $70,000

Canada: $306,000 - $326,400

Switzerland: $196,200 - $272,500

Israel: $100,000 - $120,000

Portugal: $140,000

Denmark: $168,000

Syria: $150,000 private; $24,000 public health system

Hong Kong: $135,000

Spain: $84,000 - $140,000

Iran: $200,000 private; $30,000 public health system

Ecuador:

$12,000

Australia: $300,000 public health system; $350,000 Private

In almost every situation pathologists working for the National Health Service or a public health system made considerably less money than their private counterparts.

Also, it should be noted that Canada pays the same for a first year pathologist as it does for a seasoned veteran. You can come out of school and make really good money while learning your trade.

It’s interesting to compare these numbers with a study I did last fall. That study showed the average private practice pathologist in the USA made about $536K (before expenses, benefits and taxes). I had 1,600 pathologists in this study. It is figured that the average university pathologist makes around $250K (with considerable benefits and retirement). From my experience the salaries at the large national labs are running around $140K - $160K.

So what can we surmise from this? First and foremost, a public health system will not be favorable for pathology salaries. Second, in almost every case where a public health system exists, there is a common need for a private market that performs the same work with better financial outcomes for the pathologists. Finally, even the lowest paid pathologists in the United States make considerably more than their foreign counterparts.

Deja vu All Over Again

2011-03-28T10:35:00.000-04:00

I heard a talk this week from an old friend who has been in the pathology world for a long time. He understands the business side of things very well and is well aware of the issues surrounding the in-sourcing of pathology by specialists. His take on this trend is that pathologists have brought this on themselves. He noted several ways that could be used to prevent this from taking place: wait for the government or payers to fix it, wait for it to become unprofitable through payer changes, or simply accept that this it the way it is going to be. He also noted that maybe one way to stop it would be to stigmatize those pathologists that do this type of work.

This reminds me of another negative payment trend that was accelerated by passivity: the non-payment of Part A compensation. I remember years ago talking to the College of American Pathologists and others about stepping up and taking a stand against this practice and drawing a line in the sand. Nobody listened and over time it just became an accepted practice. No one took a stand and everyone lost.

Now we see the same thing with in-sourcing. What if the CAP and ASCP decided that these in-sourced pathologists were somehow not eligible for their societies? I understand this would be a radical notion but would it “stigmatize” these in-sourced pathologists into their own society or ostracize them in some way?

I don’t have the answers, I am only a guy who sees these trends from the 10,000 foot view and I see the downstream results. Look at what happened in Texas when BCBS tried to decrease payments significantly. The pathologists decided that this did not work for them and they cancelled their contracts, which in time lead to the payer backing down and paying them what they deserved. It took guts and a strong leadership by the Texas pathologists, but it worked.

Compare this to the JVHL plan in Michigan where this “network” has eviscerated pathology payments and no one has stepped up to stop it. Everyone has stood idly by and watched as others profited from their loss.

Imagine if the urology practice or gastroenterology practice could not find a pathologist to do their work? Imagine what is going to happen the first time there is a large lawsuit and it is brought to the nation’s attention that this whole urology /pathology relationship is based on a financial incentive. That could get interesting.

Maybe we are heading for a segregation of pathology. Maybe in ten years there will be a society of sub-specialized pathologists. These pathologists will specialize in one tissue type only and will be very good at their profession. Unfortunately, these pathologists will make about one half of the current pathology salary and do very simple methodical work; basically it will be what my friend fears the most. The pathologist will become a technician who is a simple commodity to be traded at the lowest price.

Mick Raich is the President / CEO of Vachette Pathology, the nations leading pathology consulting and management firm. He can be reached at 866-407-0763 or at vachettepathology.com.

1993 Medicaid Reform Comes to Florida

2011-03-23T10:08:00.000-04:00

Recent articles in the Wall Street Journal and coverage on public radio have brought to light the very real issues surrounding state Medicaid plans and their unique struggles.

Several things are causing states to look at changes in their approach on Medicaid payments. First, eight million Americans have joined Medicaid programs from 2007-2010 which is about 2.5% of the estimated population of the nation. Second, the new health care law requires that the states not limit eligibility or they can lose their matching Medicaid funding. The federal government picks up 57% of the state Medicaid costs for services.

With these looming issues, states are looking closely at what they have to offer and are considering other options. Florida has a good example of this. According to the new health care law, they would have to allow another two million people into Medicaid in their state alone. Even with 57% matching federal funds they cannot afford this cost.

Florida is looking at other options. They are already aggressive in their approach and have run a Medicaid managed care pilot program in Broward County. There are issues with these programs as Medicaid patients struggle to work through the arduous managed care rules for pre-authorizations and have serious treatment compliance complications.

Ethically, we may be approaching a shift here, as Florida has recently proposed a new Medicaid health care plan that would require some enrollees to attend smoking cessation and weight loss classes. There are also legal implications as the new proposed program would shield Medicaid providers from malpractice suits.

One can only imagine the protests this will cause. I can see the professional protesters in Wisconsin (yes there are paid people protesting in Wisconsin at this time) caravanning down to Tallahassee to start the process all over again. Here they would be resolving the “unalienable right” to smoke, be overweight, collect free health care, and sue anyone who stands in their way.

The final note on the Medicaid changes in Florida is the fact that the state wants managed care plans to take over this population and will pay them a fixed amount for health care coverage of these patients. Basically the state is trying to capitate their Medicaid costs and outsource to managed care plans.

What does this mean to pathologists? It could be the beginning of contracting via Accountable Care Organizations for all of their Medicaid patients. How does this all end? Not good.

I had the experience of working with hospitals and physicians in the 90’s in the Detroit metro area where this exact same thing was proposed and implemented. What happened? Basically all of the managed care plans folded after five years and defaulted on their debts; the pathology practices settled for around 5% of the total amount owned to them, this compares to the average Medicaid payment of around 18% on the dollar.

We all know that change is a constant; the only real issue is the volume of change. In this case the volume and impact of the new health care law is continuing to have ripple effects. It’s like computer programming: if you change one small thing, you must change lines of seemingly unrelated code as everything is completely and entirely interconnected.

Medicaid is the code and in the end this will change how much everyone gets paid.

Mick Raich is the President/CEO of Vachette Pathology, the nations leading pathology consulting and management firm. He can be reached at 866-407-0763 or at vachettepathology.com.

The Sky is Falling

2011-03-18T09:18:00.000-04:00

I spent five years working in an inner city emergency room. I was the guy who called your family if something happened, if there was an accident or tragedy. I took care of the social side while the doctors handled the medical side. I spent my nights working car accidents, gunshot cases, domestic violence, household accidents, etc. While working there I saw my share of abnormal injuries and death. The child killed by the toaster … the adult who lost a limb to the garage tools … When you work in that environment you see all the ways that the normal things in our lives can cause pain and injury. After a while, you fear your toaster and have a new respect for your barbeque grill.

It’s the same in this field. I spend my days looking at the worst possible billing situations. I see people paying 17% for billing when 7% is perfectly fair. I see billers making mistakes and hiding their errors. Perfectly good pathology cases are not being billed, account receivables are greatly inflated and stuff is hidden in drawers. It is not unusual to see where good solid pathologists are losing lots of money. When you see this over and over again you start to see trends. And like in my past life, you begin to think the sky is falling. Everything becomes the next great failure.

It’s amazing how our environment affects our outlook. When you are in a given environment for a long period of time you begin to think that is “normal.” I see this when I audit billing practices. Groups say over and over again, “things are going great here” and when I audit them I find thousands of dollars that were never collected due to bad diligence.

It’s hard to see your environment and how it may be twisting your outlook. I have to be mindful of how these inputs affect my thinking.

Ask yourself how your environment is affecting your outlook? Are you afraid of your toaster, are you ignoring the 50-gallon drum of gasoline in your living room? Is everything normal or are you blinded by your nearness to the situation? Is the sky falling or not?

Stories That Will Curl Your Hair...Or Close To It!

2011-03-16T10:57:00.000-04:00

By Michelle Miller

I recently had an opportunity to speak at the Florida Society of Pathologists in Orlando.

My talk centered on the aspects of the pathology practice that are often overlooked and tend to cost you money – the business side of your practice. It’s one thing to turn signed out cases over to a billing agency and another to manage said agency. While it’s not the most glamorous of jobs – especially for a physician that went to school to practice medicine – it’s definitely a job of utmost importance because the biller has a direct line to the pathologist’s wallet.

Items we discussed are not new or earth-shattering. They are basic procedures that need to be monitored and attended to in terms of contractual obligations and compliance. Here are a few points to keep in mind:

1. Audit, audit, audit! It is essential to audit your billing company from time to time not only to be sure there are good processes in place but also for compliance reasons. The OIG has strongly recommended at least one audit per year. Here are a few things to watch for:

Ø Unit billing: Do the units billed match the reports?

o An audit completed by Vachette indicated that the biller routinely billed one unit on multiple unit 88305 cases costing the practice valuable revenue. When is the last time you verified that your biller is capturing units?

Ø Unit billing: Do the units paid match the units billed?

o The billing agency should have a process in place to verify that the correct number of units is paid. For example: 88173 is a common code that must be appealed for more than one unit. Is your billing agency doing an automated or manual check on this?

Ø Paid amounts: Is the amount paid correct?

o One carrier changed their fee schedule and ended up paying a group at 50% of current Medicare! The billing agency was not tracking payments and missed the change. It was only found because the practice requested an audit. Vachette found that biller’s have a hard time tracking correct payment rates by CPT and routinely accept the incorrect amount as final payment. There should be an automated process for tracking payments by CPT.

Ø Adjustments: Are these taken according to contract? Are there adjustments done that should not be done (ex: adjustments taken for a carrier with which you are non-par)?

o Adjustments need to be monitored each month. An audit completed by Vachette found that the billing agency routinely accepted the adjustment for non-participating carriers instead of balance billing the patient which resulted in revenue recovery of over $500,000. There is no contractual obligation for the group to accept the discounted rate at this point. This also takes away from the leverage to negotiate the group should they ever need to negotiate a contract with the carrier/network in question.

2. Contracts: Be sure that you and your billing agency have copies of executed contracts on hand for obligatory purposes: termination, filing limits, etc…

Ø Having a copy of your contract verifies all carriers and networks with which you are participating. If you don’t know, you are most likely not getting paid correctly.

o Carriers will routinely discount through mutually contracted networks whose rates are typically lower than your contracted rate. We negotiated a contract for $132 on 88305-26 and began receiving lesser payments through contracted networks we were unaware of – payments as low as $44.17 per unit. It took 18 months to terminate all the network contracts!

3. Fee schedule: When is the last time you reviewed your fee schedule? This should be done on a yearly basis. If you are billing clinical component, when is the last time the billing agency compared your fee schedule to the hospital’s charge master? This changes regularly and should be reviewed at least quarterly.

Ø During an audit completed by Vachette, we found many examples of carriers allowing 100% of billed charge. This signifies that the fee schedule is too low and should be reviewed and increased.

Ø Hospitals are forever sending clinical tests out and bringing them in house. Chances are that you have changes to make to your clinical fee schedule if your billing agency does not routinely review the charge master from the hospital.

4. Billing automation: What type of data transfer is your biller utilizing? Do they have the capacity to accept/send electronic data to and from carriers? The hospital? The more electronic data transfer (EDT) available, the easier it is to renegotiate billing fees.

Ø Billers like to set things up electronically. This drives down their costs which in turn drive down the fees you are paying to them.

o Another plus to automation is tracking of cases billed. If you are not tracking accessions, you are missing charges. One audit we did showed that of 201 cases, 5% were unbilled. The same audit also revealed that 37 cases were requested for billing after we started the audit.

5. Denial Tracking/Trending: What is the biller doing to improve the front end so there is less manual follow up on the back end? This delays payment on claims.

Ø Denials are a telltale sign of whether or not your billing agency is forward thinking.

o We reviewed a denial report for several carriers with one billing agency and found that the biller had to routinely add a modifier to line item billing for more than one unit per day and appeal the cases for payment. After a quick call to the carrier(s), we found out they wanted multiple units on one line which eliminated back-end denials and appeals!

6. Refunds: Are these done regularly? This is a requirement – especially for governmental agencies such as Medicare and Medicaid that require turnaround in a specified amount of time upon notification.

Ø It is essential that refunds are completed timely. The group could potentially be fined if an audit revealed that refunds were not up-to-date.

o Note that it cost one group thousands of dollars in fines because the billing agency had not completed refunds in over 18 months.

7. Billing Contract: When is the last time you renegotiated this contract? If it’s been over 5 years, pull it out and take a look! There’s bound to have been changes in that amount of time.

Ø Standard billing rate is roughly 7% to 9% depending on region.

o A review of billing contract for a group found that they were paying their billing agency 15%. They had not re-evaluated their billing contract for many years.

Remember that your practice is your livelihood and your billing agency drives whether or not you are leaving money on the table at the end of the day.

What are you doing to watch your wallet? Michelle Miller is the Vice President of Vachette Pathology. If you have any questions or would like more information, please feel free to contact Ms. Miller at 517-486-4262.

PECOS PECOS PECOS

2011-03-14T09:18:00.000-04:00

By now, we have all heard of the PECOS problem. Simply put, PECOS is the latest version of UPIN, PTAN, NPI or any other acronym the government has come up with to attach to your CMS provider number. Why we need another number is a question that only a government employee can ignore to answer...

The bottom line with PECOS is that this takes effect on April 1st. How apropos. If your referring physician does not have a PECOS number, then CMS will not pay you for this work. Therefore, it is important that you check with your biller to ensure that all these referral sources are correctly credentialed via PECOS. You must also be updated in CMS' credentialing system. Be sure that your billing agency has taken the necessary steps for you too. Contact Mick Raich at Vachette Pathology, 517-486-4262, to learn more.

Who's Billing Who?

2011-03-10T09:11:00.000-05:00

Some of our pathology practices are actually getting a bill from insurances for billing their patient's insurance plan.

Yes, you read that correctly. In a strange twist of fate, some of our pathology practices are actually getting bills from the exact same insurance plan they are billing! I know, it boggles the mind to even think of this. What comes next, you pay the patient for the diagnosis?

Some insurance plans and joint venture networks have actually sent bills to our pathology clients. These bills claim that the insurance plans had to use a clearing house to get paid and therefore they are passing this cost on.

My advice - ignore this bill and do not pay it. In fact, I'd be tempted to send them a bill for my time and consternation! But then again, that's just one opinion. For further information contact Mick Raich at Vachette Pathology, 517-486-4262.

Refund Penalties

2011-03-07T09:29:00.000-05:00

It was recently reported to us that one medical practice received a substantial penalty for not paying their refunds in a timely manner. Please see the rules noted below for clarification:

50.12.3 - Time Limits and Penalties for Physicians and Suppliers in Making Refunds
(Rev. 1587, Issued: 09-05-08, Effective: 03-03-08, Implementation: 03-01-09)

A required refund must be made within specified time limits:

- The refund must be made to the beneficiary within 30 days after the date the physician/supplier receives the remittance advice (RA) if the physician/supplier does not request review of an initial full or partial denial; or

- The refund must be made to the beneficiary within 15 days after the date the physician/supplier receives the notice of the review determination if the physician/supplier requests review within 30 days of receipt of the notice of the initial determination.

- Physicians/suppliers who knowingly and willfully fail to make a refund where required within these time limits may be subject to civil money penalties and/or exclusion from the Medicare program.

- The beneficiary should contact the contractor or CMS when a physician/supplier fails to make a timely refund. If the contractor determines that a physician/supplier failed to make a refund, it will contact the physician/supplier in person or by telephone to discuss the facts of the case. The contractor will attempt to determine why the required refund has not been made and will explain the legal requirements. The contractor will determine whether referral to the Office of Inspector General (OIG) is appropriate and will make the referral to the regional OIG Sanctions Coordinator if necessary. The OIG may impose civil money penalties, assessments and sanctions if it fails to make the required refund. The contractor will retain a detailed written report of contact.

Refunds have often been an issue when we perform our audits. There are times when we see refunds more than six months old. It must also be noted that many managed care contracts have set limits on refunds. Often, they will not refund any claims after a 60 day limit. Want to know more? Contact Mick Raich at Vachette Pathology, 517-486-4262.

Grandfather is aging...

2011-03-03T16:06:00.000-05:00

Recently, there have been additional changes pertaining to the Grandfather Exemption. It seems that CMS now wants the provider to be set up as a specialty code 69 provider. This means that if you are billing under the grandfather clause then your specialty code should be listed as 69. Some providers are going back to CMS and attaching this specialty code to their current NPI number.

The reasoning behind this new change may be that CMS currently has no database of who is grandfathered and who is not. Therefore, if they require you to be a specialty code 69, then they can use this designation as a way to track providers.

As an interesting twist in this story, we are already starting to see some commercial providers denying claims under this rule. Want to know more? Call me for further information. Mich Raich, Vachette Pathology at 517-486-4262.

2011-02-21T13:08:00.000-05:00

First in a 5-part series, this short video "New Economic Realities" re-caps Mick's involvement in the CAP '10 Transformation Plenary discussion this past fall. Click below to view the first segment...

The Art of Customer Service

2011-02-18T11:00:00.000-05:00

I fly a lot. Last year I flew 32 times. This means I took at least 64 separate flights across this nation. It is interesting to watch the people attending to your needs when you fly. The flight attendants, gate access people, even the baggage handlers. Some of these people seem to get it. They understand distinctly and correctly that they are here to take care of us, we are the customers.

Lately, I have had the unpleasant duty of working with some rather unique billing situations for my practices. It seems in every case the billers have reached a point where they are treating their customers poorly. I really don’t understand this. The billers are accepting a check from my clients for supposedly providing a service and yet they seem to mistreat their customers.

In one case, I discovered a billing company that was performing far below par. The practice group was losing $25,000 a month, while paying four percent more than the national rate for the services provided. When we approached the biller about these issues, they threatened the group saying, “We’ve worked together a long time, you wouldn’t want anything to ruin our relationship and jeopardize your income?”

It seems to me that somewhere along the line the difference between “customer” and “provider” became blurry, and now the group has to be indebted to their service provider. Whenever I see this type of relationship I get really scared; I start wondering what is actually taking place and how much the group is really losing.

In summary, I own a business and I have clients. I am very grateful to them every day that they allow me to work for them. They are my customers and I must always find a way to make sure I am providing a good value to them in return for payment.

Ask yourself if you are being treated like a customer. Are you a happy shopper at Nordstrom’s? Or another face in the crowd at Wal-Mart? For further information call me at 517-486-4262.

Cause and Effect

2011-01-11T10:55:00.000-05:00

Recently, CMS announced they will be cutting their payment for the UroVysion Bladder Cancer Test. This represents a classic business process at work. Even though the Federal Government is a large bureaucratic agency, they still have a capitalistic approach, they respond to market changes just like any other industry, it just takes them longer.

CPT code 88367 has been changed to 88121 and cut by 56%, CPT code 88368, has been changed to 88120 and slashed by 41%. This is exactly what was expected as the volume of these codes has risen and their popularity continues to increase. The real question may be “How is this going to affect those practices that bill for these tests?” and “How are they going to respond to this market change?”

Living in an agricultural region, this change reminds me of the fluctuations in the corn market in recent years. When the corn by-product ethanol took off, my small town benefited from the new ethanol plant that was built. This plant brought jobs and commerce to the town and all of the farmers were ecstatic that their corn would now have more value. I spoke with many of them about monitoring their capital growth. I was worried that they would take the inflated price of $7.00 per bushel and expand their operations based on this, thinking that the “gold rush” would last. When you buy a $400,000 tractor you’d better plan on a long-term payment plan. Some listened and others went “bust” when the price plummeted to $3.50 a bushel.

Most businesses are the same no matter what they sell or provide. Markets change and fluctuate, and businesses must be able to handle these changes and maintain margins necessary to weather the storm. The low cost provider is always the first to fail.

Consider the UroVysion payment change. Understanding that some practices are operating with profit margins that are so slim, this change may cause catastrophic failures.

Many pathologists have heard me speak about “working smarter and not harder.” These groups wonder why I rant so loud against Part A cuts and managed care contract decreases. It is our job to defend our practices’ profit margins and to keep them from being the low cost provider; to keep them from suffering and being unprepared for the changes that inevitability will come.

My Christmas Story…

2011-01-03T10:15:00.000-05:00

The center piece on my dining room table this Christmas was unique. It was a grocery bag full of clothes and ninety cents. Here’s the story behind it...

It was Christmas Eve day and I was tasked with buying the last of the needed groceries. I also had to stop over at a friend’s house and drop off a gift he had left in my car. On the way to his house I passed a man walking down the side of the road. He had on an old Michigan jacket and was carrying a bag of clothes. I drove past him and cursed myself for not stopping and checking on him.

After dropping off the forgotten gift, I headed back into town and passed the same guy walking along the road. It was cold outside and Christmas Eve, and something in me told me to turn around. As I approached him I turned my car around and pulled beside him.

I asked if he needed a lift into town (six miles away) and he got in. As we chatted he told me he was headed to Grand Rapids, Michigan which was three hours away. He had his bag of clothes; he had a fight with a friend and was walking back to his parent’s house. Todd was 43 and had made some mistakes that were catching up to him. He had only his driver’s license and ninety cents. That was it…

Well, I made a bit of a road trip that day. I made some calls and drove him to Jackson, Michigan and got him on the bus to Grand Rapids. He was on his way. Myself, I was late with my groceries and dinner was going to be delayed.

I told my family this story as they gathered around the table. I explained to them to remember to be grateful for all the goodness and opulence in their lives. Here was a man with all his worldly possessions in a paper bag and we were surrounded by a sea of wrapped gifts. Take a minute, be grateful and remember all the treasures that you have in your life. Merry Christmas and Happy New Year.

That Time of Year

2010-12-14T12:11:00.000-05:00

It is that time of year when practices are looking back. Looking back on the year and asking the tough questions. It’s been a tough one from the economic side of the industry.

I have seen an increase in self pay volumes across the board driven by the economy. This means more and more dollars are going into the bad debt category. These self pay patients are harder to collect from and are forcing billers to be better at their tasks. For example, billers routinely use “scrubbers” now to clean any self pay patient accounts and see if these patients are signed up for the state Medicaid programs.

Overall many practices are working harder to maintain the status quo. As I noted in the CAP’s Transformation Plenary, many practices are seeing an increase in anatomic volume without the corresponding increase in revenue.

Revenue has barely stabilized this year and only a slight increase in the Medicare fee schedule has prevented groups from taking substantial losses.

The best practices are proactive. They are the practices that allow us to re-negotiate or terminate their punitive manage care contracts. 2010 has been the year to educate hospital administrators of the pathology and laboratory market and I can only see an increase in this type of education for 2011.

The biggest success story of the year has been a hospital that took their pathology billing out of their MSO and outsourced the work. This allowed the hospital to pay the salaried pathologists better and given the hospital administration a clear look into the pathology economic market.

PECOS Delayed Until Further Notice - By Kevin Meidt

2010-12-09T09:02:00.002-05:00

The Centers for Medicare & Medicaid Services (CMS) recently announced that it has delayed the effective date of their Internet-based Provider Enrollment, Chain and Ownership System (PECOS) that was scheduled to take effect January 3, 2011.

This was introduced as “the next best thing” to help you with reimbursement. The CMS Web site states the Advantages of Internet-based Pecos are as follows:

Faster than paper-based enrollment (45 day process time in most cases, vs. 60 days for paper)
Tailored application process means you only supply information relevant to your application
Gives you more control over your enrollment information, including reassignments
Easy to check and update your information for accuracy
Less staff time and administrative costs to complete and submit enrollment to Medicare

I do not doubt this system will do all of the above, just be aware of a “wolf in sheep’s clothing.” The underlying motive is the bottom line of CMS. They are looking to save money first on overhead and second through rejecting your claims.

Profit is not a four letter word

CMS is out to make a profit just like you and I and every other business worldwide. The key is to make sure that their profit is not cutting into your profit.

In an article posted on the College of American Pathology (CAP) Web site, February 2010, titled “Don’t Delay: Help Referring Physicians Register in CMS’s PECOS – Not Doing So Could Stop Your CMS Payments.” The article states “The Centers for Medicare & Medicaid Services (CMS) ordered Medicare Administrative Contractors (MACS) and carriers to issue warnings – and in the future to stop paying for services – when the service’s referring physician’s National Provider Identifier (NPI) and the first and last name are not in CMS’s Provider Enrollment, Chain and Ownership System (PECOS).” Go to www.cap.org to view the complete article.

Bottom line amounts to this... if you and any referring physician are not registered, you will not get paid.

Originally, CMS was scheduled to stop paying claims back in January 2010. Since then, they have twice delayed the rule to take effect on January 3, 2011. Most recently, they have delayed the deadline again with no target date at this time. Contractors and carriers have been told to continue to process claims and if the claim fails the edits, to send out the warnings stating payment will stop.

If you do not want to lose income, you will need to do some footwork to reassure you and your referring physicians are enrolled in Medicare’s PECOS system. CAP has posted a Sample Letter to Referring Physicians for your convenience; go to http://www.cap.org/apps/docs/practice_management/pecos_sample_letter.doc to review the letter.

Pathology Salaries and the Big Picture.

2010-11-29T13:50:00.001-05:00

I recently read where Sonic has purchased CBL Path. This is a nice entry point for Sonic and will give them a larger foot print in the anatomic pathology world. This sale prompted me to think about how companies like Sonic, Quest or Labcorp make a margin on their anatomic pathology cases.

Over the past 15 years, the big labs in the United States have worked hard to gain market share in anatomic pathology. At first, their thoughts must have been to come in and make money from the technical component of anatomic pathology work. It is common knowledge that the technical side of the billing has risen steadily, while the professional side has been slowing declining. (Please note it is the increase in the technical component that has allowed so many pathologists to outsource the histology work from their community hospitals and start their own anatomic pathology labs.)

Let’s assume that theses companies enjoy a fair profit margin from the technical work. But how do they profit on the professional side of the market? It has been rumored that they are getting 65% of Medicare from their national payer contracts. How do you make a profit at 65% of Medicare? The answer came to me when I attended the recent CAP and ASCP shows. I had the opportunity to speak with many pathologists from around the nation. I often asked what they thought the average pathologists made for a year. The answers stunned me. Many of these “commercial” pathologists told me the average salary was $180,000 to $220,000. I found this interesting as this range is usually the starting point for pathologists coming out of school, not someone with 10 years of experience. (My database shows that the average pathologist makes around $537,000 per year. This data includes more than 1,600 pathologists working nationwide in private practice.)

Look closely and the answer is simple. If these labs get paid 65% of Medicare they have to make a profit somewhere. Obviously, they are making this margin by paying these pathologists below the industry norm. In fact, if they paid only 65% of the industry norm (i.e. 65% of $537,000) they would have to pay $349,050 for each pathologist. Now you can argue that pathologists working in these labs have other non-salary benefits like 401(k) plans, health benefits, etc. But even if you add 20% for employee benefits, these pathologists are still being paid only $418,860 per year. Still a substantial decrease from the industry norm.

My gut feeling is that these wonderful, qualified pathologists are being paid considerably less then their private practice peers. Just something to think about…

Notes from the ASCP Meeting…

2010-11-02T14:16:00.000-04:00

Recently, I attended the ASCP (American Society for Clinical Pathology) meeting in San Francisco. I enjoy this meeting because it gives me another perspective on my industry. Unlike the “pomp and circumstance” of the CAP meeting, the overall mood is more laid back and less bureaucratic.

The attendees at this show range from med techs and pathology assistants to pathologists. It’s great to talk with these professionals and get their opinions on health care and the general mood of the industry.

I am also intrigued by the international flair of this show and the opportunity to talk with people from Canada, Israel, Great Brittan and Saudi Arabia. I always ask what their health care system is like. What is the quality of care? Is there a tiered system? Who controls health care? What are they paid compared to the pathologists in the United States? (I recently completed a compensation study with the help of several billers - the numbers are quite impressive!)

It was interesting to talk to these professionals from countries with socialized medicine and listen to their complaints. It may seem that their countries have no problems and that everyone loves this process. But in truth, they are having serious problems finding pathologists to fill their needs and the overall standard of care is lacking. I heard several pathologists state directly, that the quality of care is a real issue and that the overall patient outcomes are dismal compared to our system.

Although there are challenges in our health care system and pathologists may be experiencing the stress of a changing market, I feel that compared to their peers in other countries, here in the U.S. we are doing much better. Every single country that has a national health care plan seems to have a private system working in the background.

It is easy to point out the flaws in our system and even easier to suggest solutions from the sidelines. The bottom line is that if you think the grass is greener on the other side you must remember, that in the end, its still just grass.

Practices Partnering with National Labs

2010-10-19T09:40:00.000-04:00

Lately some of the practices I work with have been approached by national lab companies that want to “partner” with them. It seems these national firms want to market for the local pathology groups with the focus on the national partner gaining the reference lab work and doing the technical component. That gives the local pathology group the professional component and access to the national partners EMR platform.

My thoughts on this are mixed. I’ve seen other business partnerships like this and the truth is that these are seldom balanced. One partner usually has the upper hand and holds control over the minor partner. My fear is that my groups will be the minor partner.

On the surface this seems like an interesting offer. If you are a small pathology practice or independent lab and you have little or no marketing, then this scenario may possibly work for you. You gain some marketing exposure, new outreach work and a link to an EMR that may desperately be needed.

But on the other hand, if you already have some market share and are aggressively growing your business it doesn’t seem to make sense to partner with anyone. Consider the risks: First you have to open your current market to the new national lab. What if they’re not well received by your clients? What happens when they have issues and failures, and you are now tied to this lab by reason of your choice?

Next, what happens if this national lab sells to someone else? Maybe your new “partner” will not be so kind and they will actively market to your current clients and take away business. Also, what are the negative outcomes that come with sending the technical work away from your current technical provider (i.e. your hospital)? This relationship may suffer.

Finally and most importantly what do the numbers say? Remember as a business owner your primary job is to keep the business prosperous. Often these types of relationships are built on volume. This means higher specimen volume at a lower payment per specimen. Think about it? Is it better to have fewer specimens at a higher rate or more specimens at a lower rate? The answer is not so simple.

If you have an independent lab and you are looking to sell within the next two or three years then maybe you should gain market share to look bigger and juicier for the sale. If you are not looking to sell then you are simply working harder and not smarter.

Some Thoughts from CAP about ACO’s

2010-10-06T08:50:00.000-04:00

Recently while at CAP, I spent some time discussing ACO (Accountable Care Organizations) with several industry leaders. It was interesting to see that they thought ACO’s offer a great opportunity for pathologists as in this model they could highlight the pathology skills as benchmarking outcomes and setting standards.

Recently, one of our clients was asked by their hospital to join a coordinated care delivery system; this in fact is a version of direct capitation. In this model, which is being touted as an ACO, all the providers sign a contract to provide services at a set fee, with the volume of work being “at risk.” This means you get paid a direct flat fee for all your services whether you perform them or not. No one mentioned or seemed to consider outcomes at all.

In my experience, I have seen several versions of capitation come and go, and in every situation it is a difficult process to understand. Although the concept seems simple, “pay everyone a flat fee for their work and they will keep volumes down”, it does not apply in the pathology arena. Pathologists do not control care nor can they influence the volume of work that comes from their referring physicians. So what do they have to put at risk?

In reviewing the contractual payments offered for the above ACO, we noted that the health system was offering us about 37% of the state Medicaid program. In this state it came out to about $6.66 for an 88305-26. This is not a pretty picture.

If we look at this in the larger general health care arena, we see a scary scenario. We all know that the national health care plan is going to force more people into the health care system and this in turn will cause the volume of health care services to rise. On the far end of this process will be pathologists who will see more specimen volume. In theory, we could see pathology volumes going up and their payments going down at the same time. If you consider that the new national healthcare plan will pay most services at the state Medicaid rates and the fact that ACO’s will only pay a percentage of this rate, we may be looking at the perfect storm of bad payments.

A change would do you good…

2010-09-22T08:23:00.000-04:00

I’ve been doing a lot of thinking lately about change. As a small business owner things are always changing. Government changes, payment changes, billing changes, it’s a constant ebb and flow.

Some real changes are rippling through the pathology industry with the outsourcing of specimens by various referral providers. In many practices this is a very real issue. This type of change can make you fearful and gets your stomach tingling. But if you sit and wait to let things change around you, in the end you may miss your best opportunity. Change brings opportunity; you just have to look for it.

When I think about the business of pathology changing it brings to mind the transformations that have occurred with other industries. Look at the home entertainment business. Years ago you went to a store to rent a VHS video. Then Netflix sent the CD directly to your house. And now we don’t even have to leave the recliner with cable on demand. The changes keep coming like waves on a beach. Who knows what the next trend will be.

As a practice manager or company president, it is not your job to sit idle and await change. It is your job to go out to meet it on the beach and find the opportunities that it may bring. Now is the prefect time to look internally at how things are structured. It’s time to build new and discover better ways to keep things moving in the right direction.

CAP Transformation Project

2010-09-07T16:31:00.002-04:00

Recently, I was asked to participate in the CAP (College of American Pathologists) Transformation project (www.cap.org/transformation). This really is an interesting and thought provoking project. I think it is always good when an organization invests time and money to ask the basic question “why?” Carefully listening to the questions and talking with the people involved helped me understand what was important to CAP. It also showed me how serious they are when it comes to the future of pathology. CAP has some very intelligent, creative thinkers on their staff and I commend them on this project.

CAP asked me, "What do you think the role of a pathologist will look like ten years from now?" Here are my thoughts: It is quite possible that more and more hospital-based pathology practices will shrink in size, while a percentage of new pathologists will move into direct relationships with gastroenterology, urology or oncology practices. These sub-specialized pathologists could make up to 10%-15% of all the pathologists in the industry.

The truth be told, we are a free market economy, meaning the work will follow the dollar. At this point in time, it is very profitable for the referral sources to outsource this type of work. However, until this becomes unprofitable or the cost benefit reaches a negative, this trend will continue. It may not be pretty, but it is reality.

This month at the Annual Meeting, CAP is hosting a 90-minute session on September 28 to specifically discuss "Transformation" - Join us in Chicago!

Watching the Billing Details

2010-08-26T10:56:00.001-04:00

At Vachette we spend many hours each month auditing pathology billing. It never ceases to amaze me the number of mistakes we find. We are lucky to work with smart, heads-up business people across the nation and yet even these leaders sometimes get bogged down in the minutiae of the billing world.

I am often asked: “How do I make sure I am doing billing correctly? Can I trust my biller to handle this?” The answer is two-fold. First - Watch over the details. It is imperative that you pay attention to the little things that affect your revenue stream. Daily interfaces, and weekly edit files need to be reviewed and audited. These details will always need attention.

Second - Can you trust your biller? The answer is sometimes. Yes, there are some great competent billers in this market but the truth is even the best biller can fail if they lose sight of the details. We see it all the time, double billing, missing CPT codes, missing volumes and wrong POS codes. Even the best biller needs someone to look over their shoulder and pay attention to the details.

Vachette Pathology is a small business just like your practice or lab. Every year, as the owner, I look at what we do and audit the details of my own business to make sure I am not failing at my task. I advise you to do the same.

- Mick

Why is Mick Raich doing a blog?

2010-08-19T12:49:00.004-04:00

Mick Raich

I have been in the health care field since 1981, working my way up from an orderly into hospital administration and then into the field of practice management. Over the last 29 years, I have made a plethora of mistakes and have learned from them along the way. My specialty is the business side of the pathology and laboratory world. I have spent the last 15 years managing pathology and laboratory practices. This world has sure changed since I got started…

Now I own a business, Vachette Pathology. We are a consulting and management firm for hospitals, pathology practices and laboratories. We are not a billing company. I now spend my time at the 10,000-foot level looking at practices and their business choices to help them stay financially stable. I am proud to say I have worked in 46 states and helped more than 200 practices over the past 15 years.